HOUSE BILL No. 5219


     October 16, 2001, Introduced by Reps. Patterson, Raczkowski, LaSata, Bishop, Shulman, Koetje, Howell, Stewart, Kuipers, Neumann, Frank,
Wojno, Whitmer, Basham, Minore, Bernero, Adamini, Jacobs, Bogardus, Lockwood, Woodward and Bovin and referred to the Committee on Insurance
and Financial Services.


        A bill to amend 1949 PA 300, entitled

   "Michigan vehicle code,"

   by amending sections 45, 401, 514, and 520 (MCL 257.45, 257.401,

   257.514, and 257.520), section 401 as amended by 1995 PA 98.

               THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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           Sec. 45.  "Proof of financial responsibility" means proof of

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      ability to respond in damages for liability  , on account of  FOR

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      accidents occurring  subsequent to  AFTER the effective date of

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      the proof  ,  arising out of the ownership, maintenance, or use

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      of a motor vehicle  ,   in the amount of  $20,000.00 
   $75,000.00

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      because of bodily injury to or death of 1 person in any  one  1

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      accident, and, subject to  said  THAT limit for 1 person, in the

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      amount of  $40,000.00  $150,000.00 because of bodily injury to or

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      death of 2 or more persons in any  one  1 accident, and in the




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      amount of $10,000.00 because of injury to or destruction of

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      property of others in any  one  1 accident.

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           Sec. 401.  (1) This section shall not be construed to limit

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      the right of a person to bring a civil action for damages for

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      injuries to either person or property resulting from a violation

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      of this act by the owner or operator of a motor vehicle or his or

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      her agent or servant.  The owner of a motor vehicle is liable for

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      an injury caused by the negligent operation of the motor vehicle

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      whether the negligence consists of a violation of a statute of

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      this state or the ordinary care standard required by common law.

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      The owner is not liable unless the motor vehicle is being driven

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      with his or her express or implied consent or knowledge.  It is

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      presumed that the motor vehicle is being driven with the knowl-

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      edge and consent of the owner if it is driven at the time of the

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      injury by his or her spouse, father, mother, brother, sister,

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      son, daughter, or other immediate member of the family.

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           (2) A person engaged in the business of leasing motor vehi-

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      cles who is the lessor of a motor vehicle under a lease providing

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      for the use of the motor vehicle by the lessee for a period that

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      is greater than 30 days is not liable at common law for damages

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      for injuries to either person or property resulting from the

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      operation of the leased motor vehicle.

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           (3) Notwithstanding subsection (1), a person engaged in the

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      business of leasing motor vehicles who is the lessor of a motor

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      vehicle under a lease providing for the use of the motor vehicle

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      by the lessee for a period of 30 days or less is liable for an

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      injury caused by the negligent operation of the leased motor



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      vehicle only if the injury occurred while the leased motor

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      vehicle was being operated by an authorized driver under the

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      lease agreement or by the lessee's spouse, father, mother, broth-

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      er, sister, son, daughter, or other immediate family member.

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      Unless the lessor, or his or her agent, was negligent in the

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      leasing of the motor vehicle, the lessor's liability under this

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      subsection is limited to  $20,000.00  $75,000.00 because of

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      bodily injury to or death of 1 person in any 1 accident and

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       $40,000.00  $150,000.00 because of bodily injury to or death of

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      2 or more persons in any 1 accident.

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           (4) A person engaged in the business of leasing motor vehi-

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      cles as provided under subsection (3) shall notify a lessee that

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      the lessor is liable only up to the maximum amounts provided for

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      in subsection (3), and only if the leased motor vehicle was being

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      operated by the lessee or other authorized driver or by the

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      lessee's spouse, father, mother, brother, sister, son, daughter,

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      or other immediate family member, and that the lessee may be

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      liable to the lessor up to amounts provided for in subsection

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      (3), and to an injured person for amounts awarded in excess of

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      the maximum amounts provided for in subsection (3).

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           (5) Subsections (3) and (4) shall not be construed to expand

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      or reduce, except as otherwise provided by this act, the liabil-

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      ity of a person engaged in the business of leasing motor vehicles

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      or to impair that person's right to indemnity or contribution, or

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      both.

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           (6) As used in subsections (3), (4), and (5), "motor

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      vehicle" means a self-propelled device by which a person or



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      property may be transported upon a public highway.  Motor vehicle

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      does not include a bus, power shovel, road machinery, agricul-

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      tural machinery, or other machinery or vehicle not designed pri-

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      marily for highway transportation.  Motor vehicle also does not

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      include a device that moves upon or is guided by a track.

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           Sec. 514.  Judgments herein referred to,  shall,  for the

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      purpose of this chapter only,  be deemed  ARE CONSIDERED satis-

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      fied AS FOLLOWS:

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           (A)  1.  When $20,000.00  IF $75,000.00 is credited upon any

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      judgment or judgments rendered in excess of that amount because

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      of bodily injury to or death of 1 person as the result of any

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       one  1 accident.  ; or

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           (B)  2.  When,  IF subject to such limit of  $20,000.00

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      $75,000.00 because of bodily injury to or death of 1 person, the

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      sum of  $40,000.00  $150,000.00 is credited upon any judgment or

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      judgments rendered in excess of that amount because of bodily

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      injury to or death of 2 or more persons as the result of any

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       one  1 accident.  ; or

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           (C)  3.  When  IF $10,000.00 is credited upon any judgment

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      or judgments rendered in excess of that amount because of injury

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      to or destruction of property of others as a result of any  one

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      1 accident.

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           Sec. 520.  (1)  (a) A  AS USED IN THIS CHAPTER, "motor vehi-

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      cle liability policy"  as used in this chapter, shall mean  MEANS

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      an owner's or an operator's policy of liability insurance, certi-

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      fied as provided in section 518 or section 519 as proof of

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      financial responsibility, and issued, except as otherwise



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      provided in section 519, by an insurance carrier duly authorized

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      to transact business in this state, to or for the benefit of the

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      person named  therein as  IN THE POLICY AS THE insured.

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           (2)  (b) Such  AN owner's policy of liability insurance

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      SHALL PROVIDE FOR ALL OF THE FOLLOWING:

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           (A)  (1)  Shall designate by explicit description or by

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      appropriate reference all motor vehicles with respect to which

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      coverage is  thereby to be  granted.  ; and

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           (B)  (2)  Shall insure the person named  therein  IN THE

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      POLICY and any other person, as insured, using any such motor

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      vehicle or motor vehicles with the express or implied permission

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      of  such  THE named insured, against loss from the liability

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      imposed by law for damages arising out of the ownership,

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      maintenance, or use of such motor vehicle or motor vehicles

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      within the United States of America or the Dominion of Canada,

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      subject to limits exclusive of interest and costs, with respect

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      to each such motor vehicle, as follows:   $20,000.00  $75,000.00

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      because of bodily injury to or death of 1 person in any 1 acci-

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      dent and, subject to  said  THAT limit for 1 person, 
   $40,000.00

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      $150,000.00 because of bodily injury to or death of 2 or more

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      persons in any 1 accident, and $10,000.00 because of injury to or

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      destruction of property of others in any 1 accident.  ;

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           (C)  (3) When  IF a certificate is filed showing that a

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      policy or policies have been issued covering all motor vehicles

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      owned by the insured but not insuring such person when operating

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      any motor vehicle not owned by him OR HER,  it shall be unlawful

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      for such  THAT person  to  SHALL NOT operate any motor vehicle



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      not owned by him OR HER or not covered by  such  THE

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      certificate.

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           (3)  (c) Such  AN operator's policy of liability insurance

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      shall insure the person named as insured  therein  IN THE POLICY

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      against loss from the liability imposed upon him OR HER by law

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      for damages arising out of the use by him OR HER of any motor

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      vehicle not owned by him OR HER, within the same territorial

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      limits and subject to the same limits of liability as  are set

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      forth above  PROVIDED IN SUBSECTION (2) with respect to an

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      owner's policy of liability insurance.

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           (4)  (d) Such  A motor vehicle liability policy shall state

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      the name and address of the named insured, the coverage afforded

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      by the policy, the policy period, and the limits of liability,

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      and shall contain an agreement or be indorsed that insurance is

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      provided  thereunder  IN THE POLICY in accordance with the cover-

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      age defined in this chapter as respects bodily injury and death

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      or property damage, or both, and is subject to all the provisions

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      of this chapter.

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           (5)  (e) Such  A motor vehicle liability policy need not

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      insure any liability under any  workmen's  WORKER'S compensation

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      law  nor  OR any liability on account of bodily injury to or

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      death of an employee of the insured while engaged in the employ-

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      ment, other than domestic, of the insured, or while engaged in

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      the operation, maintenance, or repair of any such motor vehicle

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       nor  OR any liability for damage to property owned by, rented

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      to, in charge of, or transported by the insured.





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           (6)  (f)  Every motor vehicle liability policy  shall be 
   IS

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      subject to the following provisions which need not be contained

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       therein  IN THE POLICY:

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           (A)  (1)  The liability of the insurance carrier with

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      respect to the insurance required by this chapter shall become

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      absolute whenever injury or damage covered by  said  THE motor

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      vehicle liability policy occurs;  said  THE policy may not be

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       cancelled  CANCELED or annulled as to  such  THIS liability
   by

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      any agreement between the insurance carrier and the insured after

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      the occurrence of the injury or damage; no statement made by the

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      insured or on his OR HER behalf and no violation of  said  THE

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      policy shall defeat or void  said  THE policy, and except as

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      hereinafter provided, no fraud, misrepresentation, assumption of

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      liability, or other act of the insured in obtaining or retaining

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       such  THE policy, or in adjusting a claim under  such  THE

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      policy, and no failure of the insured to give any notice, forward

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      any paper, or otherwise cooperate with the insurance carrier,

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      shall constitute a defense as against  such  A judgment

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      creditor.

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           (B)  (2)  The satisfaction by the insured of a judgment for

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       such  injury or damage  shall  IS not  be  a
   condition precedent

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      to the right or duty of the insurance carrier to make payment on

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      account of such injury or damage.

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           (C)  (3)  If any person  shall secure  SECURES final
   judg-

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      ment against the insured for loss or damage covered by any such

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      policy and if  such  THE judgment is not satisfied within 30 days

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      after it  shall have become  BECOMES final, then  such  THE



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      judgment creditor  shall be  IS entitled to recover under the

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      terms of  such  THE policy in the same manner and to the same

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      extent as the insured, except as hereinafter provided.

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           (D)  (4)  The insurance carrier  shall have  HAS the
   right

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      to settle any claim covered by the policy, and if  such  A set-

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      tlement is made in good faith, the amount  thereof  OF THE

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      SETTLEMENT shall be deductible from the limits of liability

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       specified in subparagraph (2) of paragraph (b) of this section

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      UNDER SUBSECTION (2)(B).

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           (E)  (5)  The policy, the written application  therefor 
   FOR

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      THE POLICY, if any, and any rider or indorsement  which  THAT

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      does not conflict with the provisions of this chapter, shall con-

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      stitute the entire contract between the parties.

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           (F)  (6)  The insurance carrier  shall  IS not 
   be  liable

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      on any judgment if it has not had prompt notice of and reasonable

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      opportunity to appear in and defend the action in which  such

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      THE judgment was rendered, or if the judgment has been obtained

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      through collusion between the judgment creditor and the insured.

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           (7)  (g)  Any policy  which  THAT grants the coverage

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      required for a motor vehicle liability policy may also grant any

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      lawful coverage in excess of or in addition to the coverage spec-

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      ified for a motor vehicle liability policy and such excess or

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      additional coverage  shall  IS not  be  subject to the
   provisions

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      of this chapter.  With respect to a policy  which  THAT grants

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       such  excess or additional coverage, the term "motor vehicle

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      liability policy" shall apply only to that part of the coverage

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       which  THAT is required by this section.



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           (8)  (h)  Any motor vehicle liability policy may provide

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      that the insured shall reimburse the insurance carrier for any

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      payment the insurance carrier would not have been obligated to

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      make under the terms of the policy except for the provisions of

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      this chapter.

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           (9)  (i)  Any motor vehicle liability policy may provide for

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      the prorating of the insurance  thereunder  UNDER THE POLICY with

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      other valid and collectible insurance.

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           (10)  (j)  The requirements for a motor vehicle liability

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      policy may be fulfilled by the policies of 1 or more insurance

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      carriers which policies together meet such requirements.

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           (11)  (k)  Any carrier authorized to issue motor vehicle

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      liability policies may, pending the issuance of such a policy,

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      execute an agreement, to be known as a "binder", or may, in lieu

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      of such a policy, issue an indorsement to an existing policy.

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      Every  such  binder or indorsement  shall be  IS subject to
   the

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      provisions of this section and shall be construed to provide

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      indemnity or insurance in like manner and to the same extent as a

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      motor vehicle liability policy.

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           Enacting section 1.  This amendatory act takes effect

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      July 1, 2002.















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